In the late 1980s, one pop production outfit dominated the British charts, and now the acts that saw Stock, Aitken and Waterman invite comparisons with Motown are to reunite on stage for a one-off show in Hyde Park in London.

Rick Astley, Jason Donovan and Bananarama are among those who will appear at the gig on 11 July. Titled "Hit Factory Live", it is being billed as a celebration of the SAW team, consisting of Mike Stock, Matt Aitken and Pete Waterman, and of PWL records.

In the 1980s and 1990s, SAW's acts enjoyed ubiquitous success, scoring more than 100 UK top 40 hits, selling 40m records and earning an estimated £60m. The Guardian once retitled the trio "Schlock, Aimless and Waterdown".

Their biggest star was former soap actress Kylie Minogue, whose I Should Be So Lucky was the biggest-selling hit of 1988. One result was the era's highest accolade: a Spitting Image parody, which showed Stock, Aitken and Waterman in puppet form singing "She's been oh so lucky ... in us."

David Hepworth was editorial director of Smash Hits magazine when it enjoyed its biggest-ever sales for an issue – reaching a figure close to a million copies – after putting Jason Donovan and Minogue on the cover. "The SAW sound defined that era," he said. "It was upbeat and relentlessly cheerful and gave the indie rock fans something to be against."

Talking to the Guardian, Waterman, 65, said: "Two thirds of the country at the time hated our guts, but that never worried us, because we knew that kids loved us.

"No one saw the irony of the situation," he continued. "PWL was an independent, and we were beating all the major labels at their own game. We were more rock'n'roll than they were."

Waterman points out that among SAW's fans was the DJ John Peel, who reacted to a perceived snub for the trio's achievements at the 1989 Brit awards by taking him for a curry.

"His daughter was a Kylie fanatic," Waterman said, "but John understood where we were coming from. He wasn't a snob."

SAW were once voted the second worst thing about the 80s – behind Margaret Thatcher. Waterman added: "People called us the acceptable face of Thatcherism but nothing could be further from the truth. There was never anything political in what we did – we probably didn't even know which bloody party was in power! People hated us, and they lumped us in with Thatcher to make it worse. But if that's what they thought, I thought: let 'em. I wasn't going to defend us against that nonsense.

"What we did, it's candyfloss ... but there's nothing wrong with that, as long as you don't eat too much of it and you brush your teeth afterwards.

The SAW sound was based on the Hi-NRG dance music popular in clubs – Waterman had cut his teeth as a DJ in Coventry – and employed sequencers and Linn drum machines. It was "technology meets Motown songs", according to Waterman. Singers were typically brought into the process when all that was left was for them to add their vocal part.

In Waterman's autobiography, I Wish I Was Me, he relates that he had forgotten his appointment with Kylie Minogue when she first came to outfit's HQ in south London. Told he had to rush because she had a plane to catch, he said to Mike Stock: "She should be so lucky" – giving his songwriting partner the basis to the lyrics for her hit.

Waterman frequently defended the outfit's production line approach to critics – telling the NME in 1999, "My primary motive is to have hits. Not money, hits" – and it was as revenge that SAW first released an instrumental track, Roadblock, on a white label in 1987. Only when it was picked up and praised by DJs did the trio reveal themselves to be responsible. But the hits dried up in the early 90s, with Mike Stock leaving the team suffering from burn-out in mid-1991. That same year, Jason Donovan went his own way, followed by Minogue in 1992.

In 1999, Stock and Aitken went to court claiming that Waterman owed them substantial royalties – a two-thirds share of a figure some observers estimated at £12m. They lost, but not before Mike Stock branded Waterman "a buffoon" who "thinks talent is blond hair and big tits". Since reconciled with the pair, Waterman says the summer show in London is principally a celebration of PWL, but that he is "desperately trying to get the other two more involved – I'm trying to see what they want to do".

Headlining the Hyde Park bill will be Steps, an act signed to PWL in the post-SAW era, and who scored 14 consecutive Top 5 singles in the UK. Recently reformed, they embark on a 20-date UK arena tour in April.

SAW also had four Top 10 hits with the duo Mel & Kim, including the No 1 single Respectable, but Melanie Appleby succumbed to cancer at the age of 23 in 1990. "They were the key act for us," Waterman said, adding that he is working out how to pay tribute to the duo at the Hyde Park gig.

The one SAW act not present on the bill as yet for Hyde Park is Minogue, but Waterman has promised further surprises and the show's promoters have mentioned "a very special duet". This raises the prospect that Minogue will be reunited on stage with her ex-boyfriend Jason Donovan to sing their 1988 hit Especially for You.